Question

at what rate percent does the sum of money become 2.25 of itself in 2 years.

Answer 1

The accumulated value of an investment with compound interest is as such:

A=P(1+i)tA=P(1+i)t

Where AA is the accumulated value, PP is the initial investment, ii is the interest rate, and tt is the number of periods.

We have A=2.25PA=2.25P and t=2t=2, therefore:

2.25P=P(1+i)22.25P=P(1+i)2

2.25=(1+i)22.25=(1+i)2

2.25−−−−√=1+i2.25=1+i

i=2.25−−−−√−1=0.5i=2.25−1=0.5 or 50%